Under the new rules from the PBOC, those buying a second home would be eligible for lower down payments and mortgage rates which previously had been available only to first-home buyers, provided the initial mortgage has been paid off. The PBOC also loosened a ban on mortgages for those buying a third home.

The move marks a reversal from years of tightening, and comes as economic growth remains sluggish. Last night's HSBC PMI of 50.2 was unchanged from the previous month.

Previous rules required a 30% down payment from first-home buyers, but 60% down for second homes. They also allowed first-homers up to a 30% discount on mortgage rates from the central bank benchmark.

Among the gainers in Shanghai on the news were real estate developer Xinyuan Real Estate (NYSE:XIN), and home-listing website Leju Holdings (NYSE:LEJU).